Abstract The role a small marsupial, the woylie Bettongia penicillata, might play in the recruitment and regeneration of Western Australian sandalwood Santalum spicatum through its seed caching behaviour was investigated in this study. To determine the fate of the seeds, cotton thread was attached to the seeds and the trail followed. A total of 25 seed caches were located. All of the seeds were found in separate caches, which was consistent with scatter-hoarding behaviour. The average distance from the source of the seeds to the cache was 43.1 m ± 5.8 m at Dryandra woodland and 29.1 m ± 3.8 m at Karakamia sanctuary. The mean cache depth was 4.3 cm ± 0.2 cm at Dryandra woodland compared with 4.6 cm ± 0.3 cm at Karakamia sanctuary. Significantly more seedlings and saplings grew away from sandalwood trees at sites where woylies were present than at sites with no woylies. In contrast, significantly more seedlings and saplings grew under adult sandalwood trees at the site without woylies than where they were present, although there were significantly lower rates of recruitment and sandalwood regeneration at these sites. In addition, significantly more whole, undisturbed sandalwood seeds were found under the parent trees at the woylie-free site than at the site with woylies. These findings strongly suggest that little seed dispersal or regeneration of sandalwood occurs in the absence of woylies. Through scatter-hoarding, woylies have the potential to disperse and cache sandalwood seeds away from the source and significantly alter the subsequent regeneration of sandalwood. Furthermore, by caching seeds large distances away from a source, woylies could modify the distribution of sandalwood in an area.